Spectrum Trading offers a route to better performing mobile networks
If we are all to enjoy really high performing mobile networks in the future various forms of spectrum sharing between mobile operators will become essential. Spectrum trading offers the most profitable route to spectrum sharing. But in spite of the enabling legislation being over 10 years old and Ofcom passing the necessary supporting regulations over 2 years ago there appears to be little or no momentum towards any sort of spectrum trading culture. So what are the barriers?
The answer is unclear. There could be the normal fear of the unknown. The worries could be more tangible such as a fear that Ofcom might seek to interpose their competition agenda on spectrum trades or Wall Street investors might interpret spectrum sharing, however limited, as somehow diluting the value of exclusive spectrum. Neither is rational. My theory is that the main barrier to spectrum trading is a lack of precedent. If this is the case the most helpful navigational beacon is to find another industry model where trading of exclusive assets is common place. Intellectual Property Rights (patents) offers the mobile operators a useful case study. Patents are the exclusive time-limited property of the owner in much the same way that spectrum is the exclusive time-limited property of the mobile operators. Yet by far the greatest numbers of industrial patents are cross-licenced. This secures a company access to useful ideas of others in exchange for a patent that would otherwise just sit in the portfolio generating no benefit…like idle spectrum. A few “crown-jewels” patents are held back for a company’s own exclusive use. A few are contributed into patent pools where a company sees an opportunity to get a share of a much bigger cake as a result. The case study offers a useful parallel as both are about getting more out of intangible assets.
It is easy to see how spectrum “cross-licencing” could work in practice. For example Company A has more spectrum than it needs in the West of England yet is under pressure in Scotland to expand capacity. Building extra base stations would cost 10 times more than simply adding more transmitters on existing sites…but Company A does not have the radio spectrum to do this. Company B finds itself in the reverse geographic position. So Company A and Company B enters a spectrum cross-licencing agreement in their respective local geographic areas of need – both saving million pounds. This could also work across different countries in the EU.
It is less obvious how spectrum pooling might be used to profitable advantage by mobile operators. Here a ground breaking idea has emerged from the University of Surrey 5G Innovation Centre. They had been wrestling with the conundrum that 5G will require much wider radio channels to achieve a mobile data speed break-through, yet Ofcom’s competition mandate requires new releases of spectrum to be cut up into smaller slices to sustain Radio Access Network competition…totally incompatible requirements. The proposition is for spectrum holders of 5G spectrum to pool their localised unused spectrum. If a mobile operator finds itself in a geographic area where some idle spectrum exists that mobile operator can expand their RF channels to significantly ramp-up delivered data speeds. The areas where this become possible rapidly increases the higher in the radio spectrum the mobile networks operate. Ofcom data shows that in bands much above 2 GHz huge amounts of idle spectrum will exist over the UK landmass, within cities (due to shadowing effects) and inside buildings.
A simple example illustrates the potential benefits of this spare spectrum asset pooling. If there are four mobile operators each with a quarter of say a 5G band and each put their localised unused spectrum into the pool – then each can take out three times that amount of spectrum from the pool in locations where they are the only operator. Applying this to the band 3.4-3.6 GHz (soon to be auctioned) would lead to data speeds of up to 1 Gb/s becoming possible. What is neat with this concept is that the spectrum a mobile operator acquires for itself remains “exclusive” in every practical way a mobile operator needs for its network operations.
Unlocking this brighter future needs a change of mind-set by mobile operators that embraces spectrum sharing via trading as a route to higher performing mobile networks for much lower investment. The deals are there to be made…and millions of customers there to be satisfied with data speeds up to 10 times faster than exist today for most users.